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Microsoft’s “all in” the clouds

Microsoft CEO Steve Ballmer recently declared that the company is “all in” when it comes to cloud computing technology, announcing plans to update their stable of legacy ERPs to run on Microsoft’s Azure cloud platform. In this post, I’ll make a few comments to provide the Openbravo perspective.

No Big Surprise

First, this move is expected, and makes strategic sense for Microsoft. By offering ERP as a cloud-based service, Microsoft seeks to commoditize and expand another enterprise-level market, as they have done previously with BI, CRM, and many other product categories. Since Microsoft applications support only Microsoft’s own technology stack (SQL Server database + BI/Reporting, SharePoint web portal, Exchange email server, Windows OS, Windows communications server, etc.), bringing ERP to more users automatically drags along these components–effectively locking in customers, and locking out competitors like Oracle and IBM from introducing their technology into these accounts. When Ballmer says “all in”, the rest of the industry should hear “lock in”.

Thanks for the ERP Buzz

From the “expand the market” perspective, independent ERP vendors welcome any and all efforts by the Microsoft marketing machine to increase mass market awareness of the benefits of ERP. Many SMBs who could benefit from a fully integrated ERP solution have not yet taken the plunge, so we see Microsoft’s ‘all in the cloud’ initiative as a good thing from that perspective. Openbravo believes it has a unique value proposition, and we are confident that our simpler, fully-open and more cost-effective approach to cloud-based ERP will appeal to many ERP customers who make a head-to-head comparison.

Independence and web technology ensure future choices

Юридические услугиHow can we make such a claim? First, let’s consider the SMB end customer perspective. Many SMBs struggle to deploy and operate ERP systems because the solutions are unnecessarily complex. To ease this pain, Openbravo and others have simplified the ERP ownership experience with a 100% native web-based solution.

Microsoft has a strategic goal of using ERP applications to draw in as much of their technology stack as possible. Paying Microsoft to host that stack in the cloud does not remove those legacy layers of complexity, or the cost of unnecessary required components. For a simple example, Microsoft assumes that everyone in your company needs Microsoft Excel. While most SMB users do appreciate the familiarity and productivity of the spreadsheet metaphor, Openbravo meets the real need by deploying the required functionality using the most current web standards right in the browser, providing direct access to your information from any computer (or tablet) with a modern web browser.

The point is that the agile, best-fit applications are coming from truly independent vendors with the freedom to make the best design choices for their users. Make no mistake, Microsoft Corporate is now firmly in charge of the acquired line of Dynamics ERPs, with key “harmonizing” design decisions propagated from the top down. For example, Microsoft announced in January 2011 that support for the Oracle database would be discontinued in Microsoft Dynamics AX 2012. While you may not be concerned about that specific example, remember that Microsoft fields a product in every category. Consider the prospect of telling your Sales VP that

“the new Sales iPhones will need to be upgraded to Windows Mobile devices to support the forthcoming Microsoft SaaS ERP upgrade…”

“All in”, get it? Conceptually, it may sound appealing to just “outsource it all” to Microsoft. Before making such a commitment, however, consider the vast amount of innovation happening outside of Microsoft that you will no longer have access to. Microsoft may still have a monopoly on the desktop, but they certainly do not have a monopoly on innovation—especially when it comes to cloud, web and mobile technologies.

Openbravo customers have been deploying ERP in the cloud for years, and we see cloud computing as an enabler that empowers SMBs to reach higher through easy access to advanced technology. Our vision of deploying ERP in the cloud certainly does NOT include locks!

What about the channel?

Moving from end customers to the reseller and ISV channels, similar concerns come into play. “Cloud Partner Profitability Guides” aside, resellers who go with cloud deployments of Microsoft ERPs inevitably risk being disintermediated, with the most profitable rollout scenarios being the most risky. Remember, the guys who made the original ERPs are no longer calling the shots–Redmond is.

Regarding pitching Microsoft Dynamics AX as an application platform for vertically-focused software vendors, the prospect of transitioning from an ISV (Independent Software Vendor) to a DSV (Dependent Software Vendor) should make any software vendor think twice (or three times). Dynamics AX is a complex piece of software, making it a viable option for a very small subset of vendors who cater to the upper end of the mid market.

I endorse the concept of ISVs leveraging a modern web-based ERP platform to save significantly on R&D, get to the cloud, and expand their reach globally. I just think that most ISVs like the “I” part in “ISV”, so will prefer a state-of-the-art, model-driven open source ERP platform built with the most current web standards—ensuring that their next generation product can fully leverage the amazing innovation happening all around the web.

Tell us what you think

So, a bit of food for thought on where Microsoft wants to take the ERP industry. Are they really the “lesser of three evils” (so, good for weakening the SAP/ Oracle duopoly at the high end of the market)? Have they really changed their spots? Are you “all in”? Love to hear your comments!

About the author:
John Fandl is the Community & Product Marketing Director at Openbravo. BI entrepreneur and enterprise software veteran, John’s 20+ years of experience in the trenches ranges from product strategy & marketing, enterprise software development, through to ERP implementation consulting and customer support. John has assumed leadership positions at Marcam Corporation (now part of Infor), Vanguard Solutions Group (now part of Exact Software), Exact Software, and now Openbravo.

4 Responses to “ Microsoft’s “all in” the clouds ”

Hi,
I have found this site when I was looking for some information for my school project (build an information system within the scope of extended ERP with XAAS – in theory of course) and I have to say, that your application looks really great, I absolutely place it to my school project.

It’ll be interesting to see where this all goes… not sure Microsoft will be able to compete with Google’s new cloud computing attack. At Google I/O about an hour ago Google announced its new strategy for Chrome OS… $28 dollars a month per business user per Chromebook (no up-front cost), that’s for IT support and service as well.

Once everything goes into the cloud and we get more enterprise level web apps; its going to be very hard indeed for Microsoft to justify the added cost of administration for a fleet of windows machines.

If you think to the future, it only makes sense that the cloud is inevitable. I can see why Microsoft is doing it, but I don’t anticipate they will be the global leader in this or anything. It’s definitely going to have a huge affect on the ERP software industry.